Green Card Abandonment and the Exit Tax
Form I-407, the eight-of-fifteen-years rule, the covered expatriate tests, and Form 8854
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Giving up a green card ends U.S. tax residency once done formally — usually by filing Form I-407. If you held it in at least eight of the last fifteen years, you're a long-term resident and ending residency is an expatriation: you file Form 8854, and a covered expatriate owes the exit tax on unrealized gains.
On this page
The steps and tests
| Item | Rule |
|---|---|
| Ending residency | Form I-407 surrender (or revocation, or administrative or judicial determination) |
| Long-term resident | Green card held in at least 8 of the 15 tax years ending with the year residency ends — any part of a year counts as a year |
| Treaty years | A year in which you are treated as a Canadian resident under the treaty tie-breaker (without waiving it) doesn't count toward the eight (§877(e)(2)) — but once you're a long-term resident, starting to claim the tie-breaker is itself an expatriation (§7701(b)(6)) |
| Covered expatriate | Net worth of US$2 million or more, average annual net income tax above US$211,000 (2026), or failure to certify five years of compliance (the expatriation guide) |
| Exit tax | Deemed sale of worldwide assets the day before expatriation; net gain above the exclusion (US$910,000 for 2026) taxed |
| Filing | Form 8854 with the final dual-status return |
Planning
Count your years carefully — any part of a calendar year counts as a full year, so giving up the card before the eighth such year begins avoids long-term resident status entirely. Fix any compliance gaps for the prior five years before surrendering, to pass the certification test. Canadian assets (RRSPs, private company shares) count toward the US$2 million net worth test. Private company shares fall into the deemed sale; an RRSP does not — as a foreign retirement arrangement it is an ineligible deferred compensation item, so a covered expatriate includes its present value as income the day before expatriation (the exclusion doesn't apply), less any portion attributable to services performed outside the U.S. while not a U.S. resident.
Frequently asked questions
How do I give up my green card?
File Form I-407 with U.S. immigration authorities; for a long-term resident that is the expatriation date, and tax residency ends then if your tax home and closer connection are abroad for the rest of the year (otherwise on December 31).
Will I owe the exit tax?
Only if you're a long-term resident (8 of 15 years) and a covered expatriate.
Do partial years count toward the eight years?
Yes — any part of a calendar year as a green card holder counts as a year.
What is Form 8854?
The expatriation statement filed with your final return, certifying compliance and computing any exit tax.
Official sources
The IRS explains: “The expatriation tax provisions under Internal Revenue Code (IRC) sections 877 and 877A apply to U.S. citizens who have renounced their citizenship and long-term residents (as defined in IRC 877(e)) who have ended their U.S. resident status for federal tax purposes.” — Internal Revenue Service, Expatriation tax, https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
The IRS explains: “You are a resident, for U.S. federal tax purposes, if you are a lawful permanent resident of the United States at any time during the calendar year. This is known as the "green card" test.” — Internal Revenue Service, U.S. tax residency – Green card test, https://www.irs.gov/individuals/international-taxpayers/us-tax-residency-green-card-test
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk and Canadian Tax Desk handle green card surrender planning, long-term resident year counts, covered expatriate testing, and Form 8854. See pricing or book a call.
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